General Info: Atlantic Cruising Yachts and Business Yacht Ownership

[Jstower142]

I would like any and all input on ACY. I have been looking at their program and considering it heavily. Thanks

[LeeV]

Very touchy subject; note the number of responses since May.
If you don't have a financial adviser, hire one and hand him the proposal package from the company you're considering. If you trust this person, listen to him/her, not anybody on any forum.

[Gulf2018]

I too have questions. Has anyone purchased their boat thru then and placed it in a Waypoint Location?

I reviewed their sales contract and there is no financing contingency.

Seems a bit heavy handed.

I would appreciate any comments.

[rabbi]

Just a few things to consider when buying into the charter business

In the med: hundreds of little nicks and dents from *med mooring*
Expert sailors anchoring with full sails up and sheets tight. Another match of chain vs hull.Best enjoyed if the boat has the anchor from the bridgedeck and these folks don't know what a bridle is.
A couple of nude old men wearing nothing but sandals and a skipper's hat, enjoying a week on your boat.. Lovely!
Boat placed on the rocks and towed off again. nobody will ever tell you unless there is a leak requiring a lift.
Technical issues of any kind fixed between 10am and 2pm Saturdays by the cheapest local *expert*. The guy who used to be a scooter expert until last week.
Engines going full throttle as soon as the anchor is up
...

And there is nothing you can do about it but pray for luck.
In a used (ex charter) boat you can assess the boat condition before you commit., instead of committing first and then hoping for the best outcome.

[gstvsn]

All, I am also considering and would love any details on ACY BYO. Thank you in advance.

[14murs14]

I think the key thing that most outside the finance industry fail to take into account with these programs is the counter-party risk. In my review I found that best case the contact I have becomes worthless if the company I'm with goes bankrupt, worst case there are periods where I am just an ordinary creditor when they go bankrupt and get pennies on the dollar and no boat at the end, just like any other unsecured creditor. These companies can guarantee you the world, but if they don't provide you access to their books or an independent credit evaluation you're potentially taking a massive risk on their financial well-being, something that you'd be rewarded with at a 10% plus interest rate if you were lending money (which you're essentially doing) to that same company.

[LeeV]

Transparency: I have never bought a boat for charter. We are not wealthy, did not win the lottery, and are not selling our modest home.

I have owned 5 boats ranging from 22' to 40' and our current boat is due to be sold by the end of the week. We've been saving for our "retirement cat." A long time!

I've chartered @ 13 times in the BVI and Belize. I've seen how some (not most, I hope) people treat things when there's no ownership involved. I've seen folks sail into a mooring field ("I thought you drop the sails after picking up the mooring!")

In Annapolis this weekend I had the chance to speak with somebody I've known several years who works in the charter business, and who spoke quite frankly. The bottom line in his opinion, is that if you cannot afford to buy and pay for the boat, this may be one way to get one. Of course you have to fund the boat at the start, and if you're willing to sell back some of your weeks, the boat will help pay for itself. YOU WILL NOT MAKE MONEY OR BECOME RICH. Yes, if you own a 60' crewed charter boat you might make some money, but I'm talking about the average owner.

In 5 years you'll get your boat back in the condition of "normal wear and tear," however that is interpreted by the company. If you're hoping to get a shiny, scratch free boat with good looking cushions, mattresses, bimini, etc... think again. Everything may have some life left in it, but it will never look like a boat somebody bought, kept and took good care of. The engines may average 2000 hours, and the engine room may reflect the same. The balance of the loan is the balance you owe.

IF you are ok with that, and enjoyed sailing her every year for a few weeks, then you're good to go.

I'll keep saving; I'm almost there.

[CatNewBee]

I have no experience with the charter program, but bought a boat, that was chartered before.

First things first. No matter how well maintained a boat is during charter, it will have issues when you take it out. Charter crews are often inexperienced and covered by (more expensive) insurances, they lose their deposit sometimes, major issues are fixed off-season and maintenance is done to a minimum (oil change after the season and anti-fouling paint work)

There will be scratches and lots of hidden treasures once you take over the boat. There will be possibly ground hits, impacts on bow / stern / side from docking maneuvers, canvas wear and tear, cushions, blinds etc.

You buy a new boat and get an old heavy used boat back. That is the fact.
When you buy a used boat, you inspect it and pay for the current conditions, after charter you get what it is - maybe also even some legal struggle with the company to fix the issues - you will have to re-fit it anyway. The more you put in upfront, the more stuff may brake and the more stuff you need to fix after.

Considering keeping the boat and sailing it - you probably will opt for a owners version. That is a bad thing for chartering. Owners versions are less likely to be booked, charter is expensive and people tend to share a charter with others, a owners version is a imbalance for one party towards the others. OW cats are chartered 30% less than the 4 cabin versions, what directly impacts your revenues. The good thing is, the engines hours are lower.

If you are into chartering, consider buying a charter version with basic charter equipment instead of full-blown liveaboard stuff. After charter, sell the boat and buy what you want for living on board, either pre-owned or new. At least you than have more choice.

You can even keep the boot on charter as passive income while sailing.

I would separate the cruising dream from the financial dream. In the first one you are ready to throw in whatever it takes, the second one is about to squeeze out as much as possible of an initial investment. This does not go well together.

[Nelsons]

I have followed the discussion, very interesting. However I am wondering if one is looking to reduce investing costs, why not going straight for a used vessel? It’s less gambling about the condition, OW is more valuable for owners than for charter and finally lesser people sailed the vessel and lived onboard.

[CatNewBee]

Well on the boat shows the charter agents and boat sales reps. do offer charter programs, both are very interested in your money either by selling the boats or getting the boats for charter.

The charter company and the boat builder always win in this scenario while using your money to work with.

Main argument is, you have the owners weeks where you can learn to sail or even try other boats of the same category for free.

Most often you would try to book your owners weeks when the charter company cannot find a customer for your boat, otherwise you may lose money / income.

As I said, if you are into the business to make money, go serious and all in with a charter version. You always can charter a boat for your leisure time if you like to anyway. Make some money and then when you are ready, buy the boat you like for live aboard and re-fit it to your needs. There need not to be a connection between the boat(s) in charter and the boat you want to live on. You may even go for 2 mono-hulls or power boats for charter or a share on a larger boat if the revenue is right (difficult to re-sell!) - and then buy your cat for living.

Charter boils down to maximize the income of an investment: revenues minus difference between investment and resale value minus taxes and costs.

A boat, that is a good charter investment is not necessary the one you want for living on board.

[LeeV]

Originally Posted by Nelsons

I have followed the discussion, very interesting. However I am wondering if one is looking to reduce investing costs, why not going straight for a used vessel? It’s less gambling about the condition, OW is more valuable for owners than for charter and finally lesser people sailed the vessel and lived onboard.

[VeinDocFL]

So what no-one is really taking about is the depreciation schedule. By buying a boat to put into a charter situation of some sort is to create a business entity that can depreciate the asset / boat in a preferential way against ordinary income. The "trick" is to find the boat you want to cruise on, find a "charter" situation that satisfies your accountant insofar as creating a business arrangement for your boat, that doesn't beat it up too badly before you are ready to use it for cruising. Sometimes the top line income isn't as important as the tax implication.

[belizesailor]

While I dont recall this particular company's program being discussed here, yacht ownership charter programs have been discussed extensively here...along with at least general financials feedback. Give earlier threads a read.

Bottom line: roughly a financial wash, as the OP put it, is a common outcome.

[belizesailor]

Originally Posted by VeinDocFL

So what no-one is really taking about is the depreciation schedule. By buying a boat to put into a charter situation of some sort is to create a business entity that can depreciate the asset / boat in a preferential way against ordinary income. The "trick" is to find the boat you want to cruise on, find a "charter" situation that satisfies your accountant insofar as creating a business arrangement for your boat, that doesn't beat it up too badly before you are ready to use it for cruising. Sometimes the top line income isn't as important as the tax implication.

+1. Depreciation can be a significant financial upside, but more important than keeping your accountant/FA happy is keeping the IRS happy (assuming a USA owner)...do this wrong, and it could get ugly.

[David Hughes]

Originally Posted by belizesailor

+1. Depreciation can be a significant financial upside, but more important than keeping your accountant/FA happy is keeping the IRS happy (assuming a USA owner)...do this wrong, and it could get ugly.

Agreed, but the rules aren’t really all that hard to adhere to, and the same is done with airplanes frequently. The IRS is nothing to fear if you make the effort. Rules can help as much as they can hurt. Just like golf.